Has anyone ever had to file a claim with the title insurance?

I closed on a rental house a couple weeks ago. Closing agent did title search, got payoff amount from BOA, etc. Everything seemed normal at closing. A week after I bought the house, someone changed the locks on "my" house. As it turns out, after the title search was done and before I closed on the house, the house was foreclosed and a substitute trustee was assigned. The substitute trustee then sold the house to someone else. My purchase was invalid since the substitute trustee owned the house. I am told I will be reimbursed from title insurance.

Has anyone had this happen to them?

Thanks

Oh boy. I'd be on the phone with everyone TOMORROW!! Attorney, title company, DA, police and probably local congressman.

Re-reading your post, I'm wondering if you are possibly being scammed by somebody. How much time did you have between your title search on your closing? That seems like a really quick time for a house to be foreclosed on and actually sold to someone else.

who has your money? you say BOA provided a payoff. that means they should have received your money and cancelled the sale. Of course, we can all read the newspaper and no on should deal with BOA but in this case, you had no choice.

So ... did YOU or did you not know this property was in foreclosure? Look at your title policy. It should show the foreclosure info. If it's not there, your settlement agent should be put out of business.

I purchase a BUYERS AND LENDERS title insurance policy that is underwritten by a billion dollar insurance company. I paid extra for a property survey showing the boundary. A few years later a new owner next door started to erect a fence claiming a 3 foot wide section over my property.

I contacted my title insurance company and filed a claim. They said they would get back with me, they never did. I hired my attorney who in turn got the construction of the new boundary fence stopped, court ordered. I then had my attorney contact the title insurance and their insurance underwriting firm. Again nothing.

So then my attorney gave notice to all parties that a suit was forthcoming. The cost of their defense would exceed $100,000 plus my attorney fee's an damages -- a quarter of a million dollars just because they couldn't be bothered.

It then went to arbitration under my title contract.

Yeah, what Ken said. Something is right here -- the timing on foreclosures just doesn't seem like it would allow this to happen. The Title company would have seen something else in there beforehand.

So, either this is a scam of some sort -- or the Title company didn't ACTUALLY do their work and hoped everything would be fine.

Do keep us informed! :)

- John...

OMG! MTT, I will add you to my "positive thinking" list! (That's like my prayers.) All my positive best goes out to you to resolve your situation.

Thanks for the responses.

The following is the sequence of events:

I got a signed contract to purchase the property

Closing agent did title search and found some issues with additional liens on the property

Seller delays closing to clean up the liens against the deed. This way, I get a clean deed (or so I thought).

BOA forecloses on property and deeded the house to substitute trustee

Closing agent contacts BOA and gets a settlement amount for our sale

I close on the house

The substitute trustee sold the house to another investor. That sell was valid.

My purchase was not valid since the owner did not own the house when we closed.

This was a cash deal. I paid $42,500. Estimated $20,000 repairs. This house will rent for $1350/month or sell for $110,000 after repairs. For me, this would have been a nice property.

I think the closing agent messed up by not rechecking the deed just before we closed.

BOA messed up by providing a settlement amount on the mortgage that they knew was foreclosed.

I do not think the seller knew they sold a property they did not own.

The closing agent assures me that I will get all my money back. They are collecting funds back from BOA, sales commissions, etc. Any money they cannot recover will be covered by the title insurance.

I did contact 4 local attorneys and they said this is not worth getting them involved. They said the title insurance will cover any losses.

The attorneys said they cannot fight BOA since BOA is so big. Besides, it was not BOA's fault.

The attorneys said it is not worth going after the closing agent.

None of the attorneys had ever heard of anything like this.

The attorneys did ask that I let them know how things turned out!

you should contact 4 more attorneys.

you don't give any time lines here but your settlement agent should be making you whole ...NOW. If they don't have the funds, the insurer should be making you whole ...NOW. It is not your concern their dealings with BOA to return your funds.

No matter what actually transpired, your settlement agent messed up...BIG TIME.

As others stated above - a foreclosure doesn't happen overnight. I don't know about other states, but the date and time of the sales here are public record. when the abstractor found (or should have found) the foreclosure action, the settlement agent needed to take some additional steps. First and probably the most important one being that your settlement didn't happen after the sale. I also don't know about other states but I don't believe your seller didn't know. Here, you get served with a notice, it gets published in the newspaper and the property gets a notice posted on the front door or window.

I got an email from the closing agent this morning and she said I will get all my money next week.